In a world where social media influencers of consumer culture flaunt receipts unfolded like ancient scrolls, frugalists tend to associate expensive things with wasteful things. Usually they’re right, but the price tag doesn’t always determine the wisdom of the purchase.
“There’s a big difference between paying a lot of money for a product that deserves status and paying a lot of money for a quality product,” says Ben Richard, financial expert, capital markets consultant, and director of Acuity Training. Mr. Son says. “When it comes to material things, luxury doesn’t always equate to quality. When considering spending money on expensive items, it’s important to be clear about the differences between the two in order to make the right decision. You need to understand.”
So spending more when cheaper alternatives are available doesn’t necessarily mean a guilty splurge. In fact, it may even make economic sense.
4 ways to make expensive things economical
Sylvia Glynn is a data scientist who crunches numbers for a living. The founder of her career and resume site Ultmeche admits that even something expensive can be economical if it fits into one or more of her four categories: .
The “buy once” philosophy argues that it is sometimes wise to buy something that is marketed to buyers who are wealthier than you. Even if the item is technically unobtainable, it’s not a misguided splurge if it’s cheaper than two cheaper versions that are likely to break and need to be replaced. .
“High-quality items usually have a long lifespan,” says Glynn. “For example, well-made appliances can last many years longer than cheaper appliances, saving you on replacement costs.”
SoFi Certified Financial Planner Kendall Mead proves that playing cheap can end up costing you more in the long run.
“I have two dogs and a shed. I have a lot of them,” she said. “We used to buy cheap vacuums at Walmart for $100 to $120, but we vacuumed at least twice a year. Once or twice a day, we would get dog hair. It gets stuck and burns out. I finally decided to buy a Dyson and it cost about $400 on sale.”
When you pay more for something, you’re often buying peace of mind in the form of a valuable warranty.
“Premium products typically come with a warranty or better customer service, which reduces repair costs,” says Glynn.
Once again, Mead’s dog-hair-plagued vacuum cleaner illustrates the point.
“We had a vacuum for a year and then it burned out,” she said. “But Dyson has a two-year warranty, so they replaced it. If the replacement product lasts for one year, she will break even. It will save you money.”
Other expensive purchases reveal their value subtly or slowly over time.
“Good shoes and suits cost more upfront, but they can leave a lasting impression at interviews and important meetings, and can help advance your career,” says Glynn.
Sam Darrow, an accounting, finance and tax expert at business financing and tax firm Counting King, also uses clothing as an example. But his value proposition has less to do with impressing hiring managers and more to do with pure economics.
“Even if you buy fewer clothes, if you spend more on high-quality items, the cost per item goes down and you actually save money,” he said. Darrow also cited the example of energy-efficient home appliances, which have an initial cost but can provide long-term benefits in the form of lower energy bills.
The fourth and final time when something expensive becomes economical is when you plan to sell everything you’re currently thinking of buying to recoup some of your costs at some point.
“High-quality products retain higher resale value,” she said. “Think about electronics or automobiles. Well-known brands and high-quality products have higher profit margins.”
Don’t confuse cost with quality, and understand the reason for your purchase.
As you can see, it’s not just the wealthy who want more expensive options. In fact, those with higher initial costs may actually save you money, but that’s not always the case.
“Keep in mind that buying a more expensive item is not necessarily better,” Mead says. “For example, I always buy generic groceries unless branded items are on sale and cheaper. The taste is usually comparable and branded foods don’t last long anymore.”
The decision is not as clear-cut as choosing a store generic over the same but more expensive name brand. The important thing is to ask yourself why you buy it, how often you use it, and for what purpose. Trying to keep up with the Joneses, follow trends, or buy social status is probably a waste of money.
Whatever you do, weigh the four criteria of “expensive but economical” against your realistic intended use.
“For example, if you want to go camping once a summer on a sunny day, you can get away with a cheap tent,” says Joel Orman, a certified financial planner and CEO of Clearassurance. “But if you plan on camping often, regardless of the weather, you’ll need a high-quality tent, which will cost several times more than a cheaper tent.”
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